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Jordan STRUCTURE AND DYNAMICS OF THE ECONOMY
In the late 1980s, depite recent reconomic setbacks, Jordan
remained more prosperous than many developing countries, and its
citizens were more affluent than their neighbors from other
nonpetroleum-exporting countries. Jordan's persistent economic
viability was surprising in several respects. Measured both in
terms of population and production, the Jordanian economy was one
of the smallest in West Asia, according to the United Nations (UN).
Its population--not including the
West Bank (see Glossary)--
numbered only about 3 million in 1989. Jordan's 1987 gross domestic
product was estimated at less than US$5.5 billion. Furthermore,
Jordan's natural resources were not nearly as abundant as those of
other Middle Eastern nations.
Added to these disadvantages was the incalculable cost to
economic development of the regional political and military
environment. The economy was dismembered by the 1967 Israeli
occupation of the West Bank
(see Jordan - The Military Heritage
, ch. 5).
Jordanians regarded the loss of this territory not only as a
military and political defeat, but also as an enduring economic
catastrophe that cost them a large part of their infrastructure,
resources, and manpower. Jordan's defense burden, although only
average by Middle Eastern standards, was very large by world
standards
(see Jordan - Defense Spending
, ch. 5). The country's 1987 defense
expenditure of US$635 million constituted 22 percent of total
government spending.
Despite such handicaps, the economy grew rapidly in the 1970s
and continued to grow in the early 1980s. According to UN data, the
annual real (inflation-adjusted) growth rate of GDP averaged almost
16.5 percent between 1972 and 1975. The average annual growth rate
fell to 8.5 percent between 1976 and 1979, then peaked at almost 18
percent in 1980. Jordan's economic growth appeared more spectacular
in percentage terms than in absolute terms because it started from
low base figures; nonetheless, the pace of economic development was
one of the highest in the world during this period. Jordan was not
a petroleum exporter, a fact that made this growth rate all the
more phenomenal.
Jordan dealt relatively well with the recession in the Middle
East triggered by plummeting petroleum prices. Between 1980 and
1985, the average growth rate decelerated to about 4 percent a
year, but Jordan's economy was able to sustain this growth rate at
a time when other regional economies, such as those of the oilproducers on the Arabian Peninsula, were actually contracting. The
boom in transit trade to and from Iraq after the start of the IranIraq War in 1980 accounted for much of the growth. The immunity of
the large service sector to demand slowdown also postponed the
effects of the regional recession. The government, however,
constituted a large component of the service sector. In its role as
a major customer and employer, the government sustained an
artificial level of growth through continued deficit spending and
a relaxed fiscal policy. Despite the extra money and demand that
the government injected into the economy, GDP growth eventually
stagnated in the late 1980s. GDP growth in 1989 was estimated at
only 2 or 3 percent.
Data as of December 1989
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